It goes without saying that pay equity is essential – regardless of race, gender, or ethnicity, employees should be fairly compensated for their work. In Ontario, we’re lucky to have this concept enshrined in Ontario’s Pay Equity Act, R.S.O. 1990, c. P.7.
What does the Pay Equity Act do for employees? Below, we’ll explain the concept of pay equity and outline critical provisions of Ontario’s Pay Equity Act that both employees and employers should be familiar with.
What is Pay Equity?
Pay equity refers to compensating employees with similar jobs with equal pay, regardless of their gender, race, or ethnicity.
From a social equity perspective, pay equity is essential in the modern workplace. Not only is it fair to provide equal pay for equal work regardless of who an employee is, but pay equity can help businesses avoid lawsuits, comply with regulations, and improve morale among their workforce.
What is the Pay Equity Act?
Ontario’s Pay Equity Act became law in 1987. This act ensures that all Ontario employees, regardless of gender, receive the same pay for equally valuable work.
The Pay Equity Act applies to all Ontario public and private sector employers with 10 or more employees.
Key Provisions of the Ontario Pay Equity Act
Below, we’ll explore some of the key provisions of the Ontario Pay Equity Act and what employees and employers need to know about them.
The Purpose of the Ontario Pay Equity Act
The Ontario Pay Equity Act aims to “redress systemic gender discrimination in compensation for work performed by employees in female job classes.”
“Female job classes” are defined in the legislation as job classes where 60 per cent or more of the class members are females. “Male job classes,” on the other hand, are defined in the legislation as job classes where 70 per cent or more of the class members are male.
But where does the identification of systemic gender discrimination come in? The Act proposes that employers compare female and male job classes within their establishment regarding compensation and the value of the work performed.
For the Act, identifying systemic gender discrimination – and remedying it – will help employers achieve pay equity. “Pay equity” for the Act is achieved when every female job class has been compared to a job class and adequately adjusted. This might involve adjusting compensation for undervalued job classes, increasing the value of the work performed in the undervalued job class, or both.
Exceptions to Pay Equity Principles
Without minimizing the importance of pay equity, Ontario’s Pay Equity Act outlines several exceptions to the rules relating to pay equity. Notably, pay equity does not apply to differences in compensation where an employer can show that the difference in pay is due to:
- Seniority systems that do not discriminate based on gender;
- Temporary employee training or development assignments that are equally available to male and female employees and lead to career advancement;
- Merit compensation plans based on performance assessments that have been brought to employees’ attention;
- “Red-circling” (gender-neutral evaluations where an employee’s wage increases are frozen due to the value of their position being downgraded); and
- Skills shortages causing temporary inflation in compensation (i.e., where an employer is paying more temporarily due to difficulties recruiting employees with the requisite skills for a position).
Ongoing Pay Equity Obligations
Once pay equity has been achieved, an employer must take steps to maintain pay equity over time – it isn’t a “one and done” exercise.
Under section 7 of the Ontario Pay Equity Act, employers must establish and maintain compensation practices that provide pay equity and cannot agree to compensation practices that do not align with pay equity principles.
Additionally, employers are required to advertise their pay equity compensation practices with employees. Specifically, every employer subject to Ontario’s Pay Equity Act must post a notice stating their obligations to pay equity and explain how employees can file complaints or objections relating to pay equity in the workplace.
Pay Equity and Adjustments
Under Ontario’s Pay Equity Act, any adjustments made for pay equity apply equally across a job class. In other words, everyone in a job class will receive the same adjustment to support pay equity principles. Furthermore, an employer may not reduce an employee’s wages to meet pay equity principles (e.g., an employer cannot begin paying a male job classless to equalize payments between job classes).
Intimidation is Prohibited
Employers are prohibited from intimidating, coercing, penalizing, or discriminating against employees participating in pay equity proceedings or exercising any rights under Ontario’s Pay Equity Act.
Pay Equity and Public Sector Employees
Ontario’s Pay Equity Act provides significant guidance on pay equity for large private-sector and public-sector employers, the scope of which goes beyond a blog post! However, one requirement is that pay equity applies to union bargaining. Specifically, pay equity plans also apply to bargaining agents and other parties involved in union negotiations, and prevail over anything agreed to in a collective agreement.
Raising a Complaint Under Ontario’s Pay Equity Act
Employees who believe they are not being compensated under pay equity principles are entitled to raise a complaint with Ontario’s Pay Equity Office. This organization administers Ontario’s Pay Equity Act by:
- Investigating complaints from employees regarding alleged Pay Equity Act contraventions;
- Providing information relating to pay equity requirements to the public; and
- Monitoring workplaces for Pay Equity Act compliance and, if appropriate, referring matters to the Pay Equity Hearings Tribunal.
Final Thoughts on Ontario’s Pay Equity Act
Ontario’s Pay Equity Act is essential for promoting equal pay and eliminating gender-based wage gaps in Ontario workplaces. Understanding your obligations as an employer – and your rights as an employee – is key to maintaining pay equity. If you have questions or concerns about pay equity in your workplace, be sure to speak with an experienced employment law lawyer for guidance.
Contact Our Employment Lawyers In Ottawa, Kingston, Cornwall and North Bay For Your Questions About The Ontario Pay Equity Act
At Tierney Stauffer LLP, our experienced employment lawyers can advise on various employment issues, including contracts, terminations, and more. To discuss your legal matter with a member of our employment team, contact Tierney Stauffer LLP in Ottawa, Eastern Ontario, and North Bay at 1-888-799-8057 or online to schedule a consultation.